KARACHI: The Federal Board of Revenue (FBR) has set up special surveillance wings to monitor transactions in real estate sector by builders and developers ahead of a proposed fixed tax regime, sources said on Saturday.
The sources said the FBR brought all the cases of developers and builders under one umbrella to monitor transactions in the real estate business.
The cases of builders and developers have been transferred to special circle established for builders and developers at Large Taxpayers Unit (LTU)-II, Karachi. Cases of tax offices in Sindh and Balochistan have already been transferred to the newly established circle.
The purpose of establishing the circle is to monitor the transactions in the real estate business, especially the declared value compared with the fair market value and the valuations of immovable properties notified by the FBR.
The sources said the developers and builders had been enjoying the final tax regime for the past several years. However, such taxpayers are now required to file declarations and also provide details of transactions made with their clients under Finance Act 2017.
Real estate sector is known as a parking lot for black money. Tax rate for builders and developers is calculated under special schedule of the Income Tax Ordinance 2001.
The government is considering a fixed tax regime on builders and developers on their demand. The FBR sources said the Prime Minister Imran Khan has already approved the fixed rate regime for the real estate business. However, it has not been notified as yet. The sources said the special circle established for builders and developers at the LTU-II Karachi has jurisdiction over the cases which were earlier with the LTU Karachi, Corporate Regional Tax Office (CRTO) Karachi, RTO-II Karachi, RTO-III Karachi, RTO Hyderabad, RTO Sukkur, RTO Quetta and all the cases of builders and developers presently assessed in LTU-II Karachi. The sources said the special circle would conduct comprehensive audit of the taxpayers in addition to obtain details of buyers.
The FBR also established special circles at Islamabad and Lahore. The Islamabad circle will have jurisdiction over cases in Islamabad, Abbottabad, Peshawar, Rawalpindi, Faisalabad, Gujranwala, Sargodha and Sialkot. Lahore circle has jurisdiction over cases in LTU Lahore, CRTO Lahore, RTO-II Lahore, RTOs in Multan, Sahiwal and Bahawalpur.
In 2018, the directorate of immovable properties was announced to ensure fair tax collection on property transactions in the market with highly variable prices. But, the directorate was aimed at to cover overall real estate sector instead of a particular segment.